In the disciplinary action, FINRA detailed how from July 2020 and December 2022, despite notifications from lower-level managers, Mireles did not respond or act on “red flags” escalated to him. These red flags were for a registered representative who had traded excessively in five customer accounts during this period. Multiple trades were repeatedly “red-flagged” for this representative. The parameters were designed to notify the firm of solicited trades with high principal amounts.
Of note was the representative’s habit of high-principal trades in the accounts of senior customers. Instead, Mireles directed the supervisor to perform only trade-by-trade assessments to review for compliance with Regulation Best Interest (Reg BI) and suitability. Mireles instructed these lower-level designated supervisors not to review the series of trades that the representative placed within an account for possible excessive trading.
The registered representative’s trading in these five accounts did not align with the customers’ investment profiles, was unsuitable, and not in their best interests. The five customers collectively paid a total of $2.2 million in trading costs and recognized losses of the same amount.
Despite these notifications from subordinate supervisors, FINRA’s investigation found that Mireles took no corrective action to investigate or prevent possible excessive trading. Therefore, Mireles failed to supervise the registered representative, in violation of FINRA Rules 3110 and 2010.
In the Letter of Acceptance, Waiver & Consent (AWC), FINRA issued sanctions of:
- Administrative fine of $5,000
- Suspension of four months prohibiting any association with any FINRA member in any capacity from 10/21/2024 through 2/20/2025
Mireles signed the AWC on September 5, 2024, and FINRA’s legal counsel signed it on September 13, 2024.
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